If Firms in a Competitive Market Are Making Positive Economic

question 44

Multiple Choice

If firms in a competitive market are making positive economic profits,the long-run market supply curve

• A) is above the point where the short-run market supply curve and the demand curve intersect.
• B) is below the point where the short-run market supply curve and the demand curve intersect.
• C) and the short-run market supply curve and the demand curve all intersect at the same point.
• D) shifts upward.
• E) shifts downward.

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Definitions:

Standard Costs

The predetermined costs associated with manufacturing a product, which are used for budgetary and inventory valuation purposes.

Residual Income

The income that remains after deducting all required costs of capital from the operating income.

Imputed Interest

The interest that is considered or assumed to be charged on an interest-free loan or bond, often for tax calculations.

Residual Income

The income that remains after subtracting all the costs of capital from the net operating income.